Transcript Slide 1

Introduction to FMLA and
FMLA Outsourcing
Ellen Donovan McCann
Spring 2013
Presentation Content
• Impact of Lost Time: What are the Costs?
• Quiz
• FMLA History
• FMLA 101
• Legal Considerations
• Employer Challenges
• FMLA Administrative Options
• Progression Study
2
Rate of Absenteeism
Paid Unscheduled Absence Hours/Paid Productive Hours
3
Lost Time Costs
The Total Financial Impact of Employee Absences
Survey Highlights October 2008
Mercer Guy Carpenter, Oliver Wyman
4
Lost Time Costs
The Total Financial Impact of Employee Absences
Survey Highlights October 2008
Mercer Guy Carpenter, Oliver Wyman
5
The Big Picture!
The Total Financial Impact of Employee Absences
Survey Highlights October 2008
Mercer Guy Carpenter, Oliver Wyman
6
Quiz
Do the following situations meet criteria for a job protected leave
under the FMLA? Yes or No?
•
•
Jane Green’s daughter, Amanda, has a chronic asthma condition. Amanda’s
condition does not necessitate a need for her to remain home from school.
– Answer: No – unless Jane is required to accompany Amanda for periodic
doctor’s appointments or treatments.
–
Marcus Doe is receiving treatment for substance abuse on an out-patient basis.
– Answer: Yes, as long as all FMLA conditions are met and treatment is
administered by a health care provider or by a provider of health care
services on the referral by a health care provider. Absence due to the use of
the substance would not be protected.
•
Since she became pregnant, Fi Marceau has experienced severe morning sickness
and is occasionally absent from work.
– Answer: Yes, any period of incapacity due to pregnancy meets the criteria.
In addition, some state leave laws may provide additional benefits due to
pregnancy.
•
Lola LaRue recently had a miscarriage and missed work due to related emotional
impact.
– Answer: Yes, any period of incapacity due to pregnancy qualifies under the
FMLA.
7
Quiz
Do the following situations meet criteria for a job protected leave
under the FMLA? Yes or No?
•
Henry Oldasice had a face lift requiring overnight hospitalization.
– Answer: Yes - While the face lift diagnosis would be considered cosmetic and
not meet FMLA eligibility criteria, Mr. Oldasice’s overnight hospital confinement
would meet the criteria for FMLA.
•
Bonnie Beauty was preparing for her 35th high school reunion and had liposuction
requiring multiple outpatient treatments with a physician.
– Answer: No - Under these circumstances, the treatments would be considered
as cosmetic in nature. Cosmetic treatments or surgery do not qualify unless they
require in-patient hospital care or unless medical complications develop.
•
Sheba Vee requested a leave to care for her grandmother with cancer who is
hospitalized. Sheba’s grandmother raised her as a child.
– Answer: Yes – because Sheba Vee’s grandmother raised her “in loco parentis,”
Sheba’s grandmother is considered a covered family member under the FMLA. In
addition, some state leave laws cover grandparents.
8
Quiz
Do the following situations meet criteria for a job protected leave
under the FMLA? Yes or No?
•
Suzie Q was hired through Smith Temporary Agency to work at the Jones Company.
She worked as a temp for a 90 day period and then was made permanent on January
1, 2007. Suzie requested leave to begin on November 1, 2007.
– Answer – Yes, time worked as a temporary employee counts towards an
employee’s eligibility under the FMLA.
•
Mary’s elderly mother has Alzheimer's. Her nursing home is closing their Alzheimer's
wing so Mary has requested leave to locate another care facility.
– Answer – Yes, arranging care for a qualifying family member is a covered reason
for leave under the FMLA.
•
James has a 28 year old son with Down Syndrome. The son resides with James and
his wife. James has requested leave to care for his son who is suffering from a serious
health condition.
– Answer – Yes, under the FMLA, an adult child who is incapable of self care
qualifies as a “child.”
9
FMLA History
FMLA History
FMLA History
• Enactment
The Family Medical Leave Act (“FMLA”) of 1993 was enacted
on February 5, 1993 and became effective on August 5, 1993 for most
covered employers.
• Revisions
New regulations interpreting the FMLA were issued in November
2008 with an effective date of January 16, 2009, these amendments included
active duty and military caregiver leave. Additional revisions issued February
6, 2013 (effective March 8, 2013) implementing National Defense
Authorization Act for Fiscal Year 2010 and the Airline Flight Crew Technical
Corrections Act.
• Accountability
The United States Department of Labor is the
governmental agency responsible for enforcement of the FMLA.
• Coverage
Based on 2005 data* there were an estimated 94.4 million
workers in establishments covered by the FMLA regulations and about 76.1
million workers in covered establishments who met the FMLA requirements
for eligibility.
• Utilization
Between 8% and 17.1% of covered and eligible workers took
FMLA Leave in 2005 (between 6.1 million and 13.0 million workers)*. Nearly
one-quarter of all employees who took FMLA Leave, took at least some of it
intermittently*.
* Family and Medical Leave Act Regulation:
A Report on the Department of Labor's Request for Information June 2007
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FMLA 101
FMLA-Regulatory Context
ERISA-Notification/Tolling
FMLA
ADA-Job Accommodation/
Protection
• Employer notification requirements
• Employer prohibitions
• Medical information privacy
HIPAA-Privacy
• 3 key aspects of the regulations:
– Creates an absolute entitlement for the employee
– Entitlement to the same health benefits as if still working
– Entitlement to be reinstated to the same or equivalent
position upon return from leave
13
Employer Obligations
An employer must, within predetermined time frames:
Evaluate eligibility for leave
- Hours worked
-
Tenure
- Location
- Employee Status
Calculate entitlement for leave
- How much time available
-
Coordination with state leave laws
Determine qualification of leave
- Meet the definition of a serious health condition or military leave entitlements
-
through review of employee-provided medical certification or information
Meet the definition of non-medical leaves
Applicable state leave laws
Confirm in writing within 5 business days of notice for leave:
- Eligibility
-
Rights and responsibilities
Confirm in writing within 5 business days of receipt of information:
-
Designation of leave
14
Methods for Calculating FMLA Leave
Fixed year Method:
•
Under the fixed 12-Month Period method, an eligible EE can take up to 12
weeks leave at any time within the fixed 12-month period selected. Employer
can select one of the following:
– The Calendar year.
– Any other 12-Month period.
Rolling Forward Method:
•
Under the forward method, an EE’s 12-Month period starts on the day the
EE’s first FMLA leave begins and ends 12 months later. The EE can take 12
weeks of FMLA leave during that 12-month period. The EE’s next 12-month
period begins the first time he/she takes FMLA leave after completing the
previous 12-month period.
Rolling Backward Method:
•
Under the backward method, an EE’s 12-month period is measured backward
from the date an EE uses any FMLA leave. Every day an EE takes FMLA leave
(including intermittent leaves) he/she is entitled to any remaining balance of
the 12 weeks of leave that has not been used during the immediately
preceding 12-month period.
Note: Flight crew employees have fixed entitlements of 72 days for ‘regular’ FMLA
and 156 days for military caregiver leave
15
Who is Covered by the FMLA?
Which employers are covered?
• Private Sector: 50 or more employees for at least 20 weeks in the current or
preceding calendar year.
• Must employ 50 or more employees within a 75-mile radius of the site where the
requesting employee works.
Which employees can take FMLA leave?
• Been employed for at least 12 months (does not need to be consecutive)
– Any week in which employee is maintained on the payroll counts (including
weeks when no work is performed)
• Employed at a site with 50 or more employees within a 75 mile radius of larger site
• Has worked at least 1,250 hours during the 12 months prior to the leave request
(consecutive)
– Only actual work time counted
– Leaves of absence, paid or unpaid, including FMLA leave, not counted
– Pursuant to USERRA, employees returning from military service shall be
credited with hours that would have been performed but for the military
service.
What about Temporary employees?
• Time worked counts toward employee’s hours and tenure requirements
NOTE: Flight Crew members have different requirements based on airline industry
scheduling equivalents
16
When Can an Employee Take FMLA Leave?
• Birth of a child
• Placement of a child for adoption or foster care
• To care for a spouse, child, or parent with a serious health
condition
• Because of the employee’s own serious health condition
• Because of a Qualifying Exigency
• To care for a family member injured in the line of duty –
Military Caregiver leave
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Birth of a Child
• Both mothers and fathers are eligible
– But if they work for the same employer, they are only entitled to 12
weeks jointly
• They can split up the leave however they want
• Can overlap
• Each spouse eligible to take his or her own remaining weeks for
other purposes
• Remember, this is a separate kind of leave from leave
related to pregnancy
18
Adoption or Foster Care
• Covers absences required in order for the placement to
occur
–
–
–
–
Attorney meetings
Court appearances
Doctor visits
Going to pick up the child
• Foster care leave only applies to arrangements sanctioned
by state
– Employer has right to request documentation
– Rule applies even if children are relatives of your employees
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Care for Loved Ones
• Spouse
– Husband or wife as defined by state law. Excludes same sex marriages
due to DOMA.
– Includes common law marriage
• Son or daughter
–
–
–
–
–
Biological child
Adopted or foster child
Stepchild
Legal ward
Any child employee has day-to-day responsibility for (practical or
financial care if the person intends to assume the responsibility of a
parent)
– Under 18, or incapable of caring for herself due to mental or physical
disability at the time FMLA leave is to commence.
• Parent
– Biological or adopted parents
– Does not include in-laws or grandparents, except if that individual acted
as a parent to the employee when he/she was a child
• You can request documentation – but proceed with care!
20
General Categories of Serious Health Conditions
• Inpatient care
• Pregnancy-related conditions
• Continuing Treatment: incapacity and treatment
• Chronic health conditions
• Permanent long term condition
• Treatment to prevent incapacitation or restorative surgery
21
Serious Health Condition: Examples
•
Allergies
•
Asthma
•
Alzheimer’s disease
•
Diabetes
•
Epilepsy
•
Mental illness
•
Restorative/plastic surgery
after an injury
•
Removal of cancerous tumors
•
Stroke
•
Substance abuse
* Remember: applies to employee or loved one
22
Examples of medically-related absences NOT
typically covered by the FMLA
• Routine check-ups
• Minor illnesses, injuries
– Even if there is a doctor’s visit
• Child falls on playground at school, needs stitches
• Employee goes to emergency room with chest pains,
turns out to be gas
• Elective cosmetic treatments not requiring inpatient care
– Lasik eye surgery
– But if inpatient care is required (as part of standard treatment, or due to
complications) it will qualify.
• Absences caused by substance abuse
– But absences caused by treatment for addiction typically will be covered.
23
Military Amendments
•
Active Duty Leave
• Up to 12 weeks of unpaid leave to address a qualifying exigency arising
out of the fact that a spouse, son, daughter, or parent of the employee is
on covered active duty (or has been notified of an impending call or order
to covered active duty) in the Armed Forces.
• Covered active duty includes members of both the regular and reserve
components of the Armed Forces.
• Covered active duty must involve deployment to a foreign country.
• Qualifying Exigency is specifically defined by the regulations.
24
Qualifying Exigency
• To address any issue that arises as a result of short notice
deployment of 7 or less calendar days. (7-day limit on this
leave)
• To attend military events and activities related to the active
duty or call to active duty, includes family support or
assistance programs and informational briefings.
• Child care and school activities
–
–
–
–
To arrange for alternate child care
To provide child care on an urgent immediate need basis
To enroll in or transfer to a new school or daycare
To attend disciplinary meeting with school or daycare (arises out of
active duty or call to active duty).
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Qualifying Exigency
(continued)
• Financial and legal arrangements
– Make or update financial or legal arrangements to address absence.
– To act as covered military member’s representative before an agency
regarding military benefits.
• Counseling
– To attend counseling (other than by healthcare provider) for oneself, the
covered military member or the child, provided need for counseling as a
result of active duty or call to active duty.
•
R&R leave (15-day limit)
– To spend time with covered military member during periods of
deployment
• Post-deployment
– To attend ceremonies, briefings, etc. for a period of 90 days following the
termination of active duty status.
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Qualifying Exigency (continued)
•
Parental Care
– Must be parent of servicemember who is incapable of self-care
– To arrange for alternate care when the active duty or call to active
duty status necessitates a change in existing arrangements
– To provide care on an urgent immediate need basis when the need
to provide care arises from the active duty or call to active duty
– To admit or transfer to a care facility when admittance or transfer is
necessitated by the active duty or call to active duty
– To attend meetings with staff at a care facility (e.g. hospice or social
service providers) when meetings are necessary due to
circumstances arising out of active duty or call to active duty
•
“Catch-all”
– To address other events provided employer and employee agree it is
a qualifying exigency and agree to timing and duration.
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Military Caregiver Leave
•
Leave to provide care for covered service member who is employee’s injured
spouse, son, daughter, parent, “next of kin”
•
Covered servicemember - current member or veteran of either the Armed
Forces, National Guard, or Reserves
– veteran’s discharge or release must be under conditions other than
dishonorable during the 5-year period preceding the start of leave
– October 28, 2009 – March 8, 2013 excluded from 5-year period
•
Not a SHC (serious health condition); a “serious illness or injury” incurred by
service member in the line of duty on active duty, and which may render
service member unfit for duty.
•
Serious injury or illness extended to also mean those that existed before the
beginning of the member’s active duty and was aggravated by service in line
of duty on active duty.
–
“In the line of active duty” is defined in military regulations to include any
injury suffered while in the military, even if not caused by the performance
of military duties, i.e. cancer.
–
There is an exclusion for injuries caused by the service member’s
misconduct.
28
Military Caregiver Leave
• An eligible employee is entitled to 26 work weeks of leave to
care for a covered service member with a serious injury or
illness during a single 12-month rolling forward period,
regardless of the calculation method used by an employer.
– Different (and potentially separate) 12-month period(s)
– The leave entitlement is applied on “per-service member, per-injury
basis” such that eligible employee may be able to take more than one
period of 26 workweeks of leave if leave is to care for different covered
service member or same service member with subsequent injury or
illness; but maximum 26 weeks in each 12 month period.
– Employee entitled to both caregiver leave and regular FMLA (even for
same SHC of covered military member).
– Maximum 26 weeks in each 12-month period for “regular FMLA” and
“military caregiver leave.”
– Employer responsible for designating leave as FMLA qualifying.
29
Types of Leave
• Single Block of Leave:
• Intermittent Leave: Leave taken in separate blocks of time for
a single illness or injury.
– Can be for planned treatments
– Or for conditions which “flare up” unexpectedly and prevent employee from
doing his job (migraines, arthritis, lupus, bad back, etc.)
• Reduced Leave schedule: Leave which results in regular
alteration/reduction of scheduled work hours during the
certified period.
– Employee is entitled to be given a reduced leave schedule if condition
qualifies
• FMLA does not require an employer to allow employees to take
intermittent or reduced schedule leave for bonding; however,
an employer can choose to allow under their leave policies
• An employee cannot be forced to take off more time than he
needs
30
How Do You Deduct Leave for Intermittent or
Reduced Schedule Absences?
• FMLA leave is based on the employee’s normal workweek.
– If employee normally works a 5-day week and takes off one
day, the employer should deduct 1/5 of a week of FMLA leave
– If employee who normally works an 8-hour day is put on a 4hour per day reduced leave schedule, he would use ½ week of
FMLA leave each week
• When employee works part time, FMLA deduction is made
on a pro-rata basis by comparing new schedule with old
schedule.
– If employee normally works 30 hours per week, but is put on a
20-hour per week reduced schedule, he is using 1/3 week of
FMLA leave each week.
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Intermittent and Reduced Schedule Leave
• Increment of time clarified
– Employer must account for leave using increment no greater
than the shortest period of time that employer uses to account
for other forms of leave
• Increment cannot be greater than 1 hour
• Cannot reduce by more than amount of leave actually taken
• If increments for other forms of leave vary based on time of
day or shift, FMLA increment can vary as long as it remains
consistent with other forms of leave taken at the same time
of the day
– Flight Crew increment no greater than 1 day
32
Tips for Managing Intermittent Leave
• Remember eligibility rule – once employee is deemed
eligible, he remains so for 12 months going forward
– But he still can only take 12 weeks during your chosen 12-month period
• Always require medical certification
– Form should specifically state whether intermittent or reduced leave is
required – send it back if it does not
– Require recertification as allowed by the regulations
• Require foreseeable leave to be scheduled so as to be least
disruptive to your operations
33
Tips for Managing Intermittent Leave
• Consider possibility of temporary transfer to a position
where intermittent absences won’t have such an impact
–
This is only allowed for planned medical treatment
• Carefully track all time
• Be careful about enforcing attendance policies
– Check with Human Resources
34
Can You Transfer an Employee to Minimize the
Disruption Caused by Intermittent Leave?
• This option is available only when:
– The employee is taking foreseeable intermittent leave or leave based on planned
medical treatment
– The employee is qualified for the position
– The position better accommodates recurring periods of leave than the employee’s
regular position
• Beware of pitfalls:
–
–
–
–
Alternate position must have equivalent pay and benefits (but not duties)
Transfer must comply with the ADAAA
You may not require an employee to take more leave than is necessary
Transfers otherwise permitted by regs may nevertheless be characterized as
“retaliatory” if duties are diminished, position less attractive
– The following transfers are generally not permitted:
• White-collar to labor, day shift to night shift
• Main office to branch (or other significantly increased burden for employee)
• When leave is finished, employee must be returned to original job
or equivalent position immediately
35
Case Study-Intermittent Leave Management
Company-Outdoor Clothing and Gear Retailer
•
# US Employees
4,500 year round
11,500 at peak (December)
•
Products & Services – Retail Sales
Offering clothing and outdoor gear for customers to enjoy the outdoors.
Contact Centers provide world class legendary service to customers
•
4 year round centers & 1 seasonal center in Northern New England
•
Handle inbound order & customer service calls 24 hrs/day, 7 days/week 365 days a year
•
Daily Call Volume: 35,250 calls off peak; 133,500 calls during peak
•
Call Center Operations are supported by centralized planning functions
(Finance, Systems/Technology, Quality, Training, Workforce Planning)
36
Case Study-Intermittent Leave Management
1,170 call center staff year round increasing to over 4,340
employees at Peak
•
Annual Turnover: 7-8%
•
STD Absence in ‘05 – 2,850 days (est. equivalent of 11 FTE’s)
•
WC Lost Time in ‘05 – 53 days
•
Intermittent FMLA Absence:
Year prior to outsourcing:
Equivalent of 1,100 days or est. 92 days/month
First 5 months after outsourcing:
Reduced to the equivalent of 187.5 days or est. 38 days/month
58.7% reduction in lost time
37
FMLA/Leave Management Services
Scope and complexity of the law
ND
MT
WA
OR
IL
KS
IN
MO
OK
NM
WV VA
NC
TN
AR
MS
TX
NY
AL
GA
MA
RI
CT
PA
OH
KY
CA
AZ
MD
IA
NE
CO
ME
MI
WY
UT
NH
WI
SD
ID
NV
VT
MN
NJ
DE
DC
SC
LA
FL
AK
HI
Key: colored areas indicate states
with additional leave regulations
38
State Leave Laws
• FMLA-like Leave Laws
• Pregnancy disability
• Bonding
• Bone marrow
• Volunteer Fire Fighters (Emergency workers)
• School Activities Leave Laws
• Domestic Violence/Crime Victim Leave Laws
• Kin Care
39
Legal Considerations
Top FMLA Violations
• Failure to identify and promptly designate FMLA-qualifying
absences. It is up to the employer to notify the employee
• Failure to educate management about the FMLA regulations
• Failure to notify employees of their FMLA rights and
obligations
• Failure to administer state leave laws correctly in
conjunction with the FMLA
• Failure to calculate leave entitlement in workweeks correctly
• Failure to understand that the FMLA can apply even if
employees don’t specifically say, “I need FMLA leave”
• Failure to track FMLA entirely because more generous leave
benefits are provided
(Source: 2006 CCH Unscheduled Absence Survey)
41
Top FMLA Violations
• Failure to designate extended leaves as FMLA, except those
who qualify for short-term disability
• Failure to realize that there can be significant penalties
assessed for FMLA violations
• Failure to determine eligibility properly (temp time)
• Counting FMLA leave against employee’s absenteeism policy
for disciplinary purposes.
• Failure to grant leave to provide physical or psychological
comfort
• Failure to reinstate to same or equivalent job
• Terminating an employee during or at the conclusion of
FMLA leave
42
Top FMLA Violations
• Failure to grant leave because of misunderstanding of what
qualifies as a “serious health condition”
• Failure to request medical certification in writing and to give
15 days
• Failure to handle questions about the validity of a medical
certification accurately to the FMLA.
Remember: Under the FMLA, individual supervisors can be held
personally liable for penalties resulting from violations of the
FMLA.
43
The risk of Non-compliance
Failing to comply with the law can be costly.
Managers can be held personally responsible for violations.
Companies can be faced with expensive legal fees and settlement fees.
The Case:
In Schultz v. Advocate Health and Hospitals Corp., a long-time employee
alleged his former employer terminated him in retaliation for using FMLA to
care for his two ill parents.
The employee took intermittent leave over several months and during this
period began having problems with his supervisors who established
performance standards he was unable to meet. The problem escalated until
the employee was terminated.
The Result:
A federal jury awarded $11.65 million to the employee. The award consisted
of $10.75 million against the employer and $900,000 individually against the
two supervisors.1
1
Schultz v. Advocate Health and Hospitals Corp., N.,D. Ill., No. 01 CV 702, 10/30/02.
44
The Risk of Non-compliance
Failing to comply with the law can be costly.
Managers can be held personally responsible for violations.
Companies can be faced with expensive legal fees and settlement fees.
The Case:
In Allen v. A.G. Edwards & Sons*, Inc., the Plaintiff, Donald Allen brought suit
against his employer, A.G. Edwards & Sons, Inc. for violations of the ADA and
FMLA as well as State Laws on constructive discharge. In 2001, he was
diagnosed with Bi-Polar disorder and briefly hospitalized. When he returned
to work, the company refused to reinstate him to his old job. A.G. Edwards
had options under FMLA and ADA but was concerned about the Plaintiff’s
ability to perform his job. Allen claimed he was demoted to a Financial
Consultant job that required him to report to the former Assistant Branch
Manager and was not reinstated to an equivalent position. The Employer
argued that there was no FMLA violation because they had returned him to a
manager position.
The Result:
The arbitration panel ultimately found for the Plaintiff and found that the
Employer violated the FMLA . Allen was awarded 1.25 million dollars.
*NASD #04-06092, June 26, 2006
45
The Risk of Non-compliance
Failing to comply with the law can be costly.
Managers can be held personally responsible for violations.
Companies can be faced with expensive legal fees and settlement fees.
The Case:
Lubke v. Arlington*. The Plaintiff, Kim Lubke sued the City of Arlington,
alleging he was discharged in violation of FMLA as a result of missing work to
care for his ill wife. Lubke was scheduled to work from December 31, 1999
through January 1, 2000. On December 30, 1999, Lubke telephoned a call
box and left a message stating that he would not be working during the Y2K
weekend because he needed to stay home with a sick wife. Lubke was
terminated for dereliction of duty, unauthorized absence and insubordination.
At trial, the employer asserted that Lubke’s leave was not protected by the
FMLA because he failed to provide timely and adequate medical certification
required supporting his claim leave.
The Result:
The jury rejected the employer’s claim and found that the employer had
violated the FMLA and awarded Plaintiff over 1 million dollars in damage. On
appeal, the Fifth Circuit affirmed the jury verdict.
*2006 WL1793268, June 30, 2006
US Court of Appeal, Fifth Circuit
46
The Risk of Non-compliance
Failing to comply with the law can be costly.
Managers can be held personally responsible for violations.
Companies can be faced with expensive legal fees and settlement fees.
The Case: Dotson v. Pfizer*. The Plaintiff, Dotson was seeking to adopt a
child from Russia and took intermittent time off to attend to the adoption,
taking two trips to Russia. The employee kept his employer informed and
spoke to his HR Dept. After returning from Russia with the child, the
employee was terminated based on an alleged violation of company policy.
Dotson sued for FMLA retaliation. The employer argued that the employee
was not entitled to FMLA protection because he failed to indicate that he
needed FMLA leave. The court rejected this argument, noting that an
employee does not have to expressly sate that he needs FMLA or use any
magic words to trigger the employer's obligation.
The Result: A jury found for the employee and awarded him more than $1
million plus prejudgment interest. The employer appealed but the court
affirmed the decision in the employee’s favor. The court also held that the
lower court erred when it failed to award the employee prejudgment interest,
making the judgment even larger than that awarded by the jury.
*2009 Dotson v. Pfizer, No. 07-1920 (4th Cir. March 4, 2009)
47
What Can You Do About Abuse of FMLA?
• Strictly follow certification requirements
• Don’t be afraid to seek clarification or ask for second or
third opinions, particularly when dealing with employees
with a history of attendance problems
• Be consistent – don’t selectively enforce
• Put everything in writing, it gives employees less “wiggle
room”
• Stay in touch with absent employees – there is no
prohibition against contacting them, asking about their
status
• Keep your eyes and ears open – if circumstances have
changed, request recertification
– But your documentation must be solid
48
Employer Challenges
Key FMLA Findings From Employers
The most frequently cited HR organizational challenges with FMLA:
80%
78%
73%
63%
57%
55%
0%
25%
50%
Tracking/administering
intermittent leave
Determining overall costs incurred
Determining whether an intermittent serious
health condition should be protected by FMLA
Overall ease of complying with FMLA
Administering FMLA’s notification, designation and
certifications requirements
Determining if a health condition is a serious health condition
under FMLA
75%
100%
Source: Society for Human Resource Management, “FMLA and Its Impact on Organizations,” 2007.
50
The Challenges Facing Employers
• Leave policies must comply with both federal and state leave laws
• Each leave request must be individually evaluated for eligibility and
qualifying conditions
• Documentation must be collected, verified, recorded and filed for every
leave request
• Consistent administration is critical
• Managers may be found to be individually liable. Employers are
subject to fines and/or other penalties if there is a violation of the FMLA
• Intermittent leaves are difficult to track
• It is difficult to coordinate STD & FMLA when they are outsourced
separately
51
Employer Challenges - Organizational
• Retention and termination of employees
• Productivity and employee morale
• Employers adjust to employees on FMLA leave by
–
–
–
–
–
Assigning work temporarily to another employee
Hiring an outside temporary replacement
Allowing work to go undone
Putting work on hold
Having employee work from home while on leave
• Indirect costs of covering for absences (extra overtime,
temporary workers, outside contractors) adds another 7%
or payroll
52
FMLA Administrative Options
FMLA Administrative Options
• In-source-Decentralized model
• In-source-Centralized model
• Outsource-TPA
• Outsource-Carrier/TPA
• Outsource-Carrier with dedicated capabilities
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The Costs of In-house Administration
•
Productivity
– Employee leaves disrupt work routines and cause confusion and distraction
among remaining staff
– Leaves can require replacement workers and/or overtime wages
– Managers must consider any impact of FMLA absence separately from other
performance issues, complicating the entire management process
• Legal/Compliance
– State leave laws are numerous and change often. Employers and their legal
counsel must constantly survey court rulings and changes in the laws to remain
up-to-date.
– Failing to comply with the law can be costly and managers can be held personally
responsible for violations
– Litigation costs are roughly $100K to $200K per claim not including settlement
costs.1
• Tracking & Administration
– It takes the equivalent of one full-time HR professional to manage leave requests
for every 5,000 employees.2
– Other tracking and administration costs include maintenance of records, storage
and supplies in conjunction with the administration of other benefits such as STD
and workers compensation.
1
2
Based on Unum internal experience, 2007.
Society for Human Resource Management, 2002 FMLA Survey.
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FMLA Administrative Options
In-Source versus Out-Sourcing-Factors to consider:
• Employer Size
• Demographics
• Industry
• Location and number of operational sites
• Absence Management Philosophy
• Company Culture
• Current Capabilities
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Outsourcing Evaluation - Look for Robust
Leave Management Services Capabilities
• Whether managing in-house or with a Carrier/ TPA, look for
these capabilities:
–
–
–
–
–
–
–
–
–
–
Single integrated solution, one vendor administering STD and FMLA
Single point of intake (STD/FMLA)
Web based reporting that allows drill down into data
Real time updates to changes in state leave laws or federal
In-house legal and technical expertise, includes newsletter to employer
Proven scale with large customer base and covered lives, strong customer
persistency
Superior customer satisfaction survey results
Administration for all separate state leave laws
Look for case studies showing enhanced productivity though reduction of lost
time
Indemnification
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The Case for Integration
Because of the significant overlap that exists between short term disability and FMLA
leaves, managing these leaves separately can cause additional costs and result in
employees absent from work longer than entitled.
58
Leave Management High Level Workflow Example
Employee calls
Unum’s
telephonic intake
• Determining eligibility for FMLA and applicable
state leaves
• Approving leaves and tracking leave data
• Distributing communications and forms to
employees as required
• Collecting and validating completed
certifications, documentation and other
paperwork;
• Conducting periodic recertification of leave
periods allowed by law
• Providing daily and/or weekly absence reports
Between 50% and 70% of FMLA
leaves are also short- term disability
absences.*
*
Based on Unum internal experience, 2007.
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Progression Study
Benefit Administration Connections
Metrics
Customers with
FMLA services
integrated with
STD/LTD
administration
Customers
with
STD/LTD
services only
Average (mean) work days
per STD claim
33.2
41.4*
FMLA claims per 1000 employees
98.4
N/A
STD claims per 1000 employees
63.2
69.9
-6.7
-9.5%
Percent repeat STD claimants
14.2%
14.8%
-0.6%
-4.1%
STD claim reporting lag
1.1 days
4.3 days
Difference
-8.2
-19.8%
N/A
3.2 days -74.4%
* Estimated mean lost work days of a comparison group (Unum Book of Business)
1.
2.
3.
4.
All values include pregnancy claims.
STD durations values were calculated using survival modeling techniques to adjust for the ratio of open to closed claims.
LTD duration was not reported due to claim maturity issues.
Values based on 2006 experience.
Things to connect:
• Reduced lost work days per claim with integrated product
• Calibration with baseline FMLA claims rate
• Reduced STD claims per 1,000 EE’s
• Reduced lag time per claim
FMLA to STD Progression Study, Unum US, 2008
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FMLA Intermittent
• A likely precursor to future absences and costs
– Evolving medical issue
– Evolving family issue
– Evolving employee relations issue
62
Questions
63
Introduction to FMLA and
FMLA Outsourcing
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